REER is the exchange rate arrived at after adjusting for inflation in countries whose (36) currency comprise the basket. "A simple look at the indices of real effective exchange rates suggests that since the crisis of 2013, India’s rupee has appreciated by 19.4 percent (October 2016 over Jan 2014) according to the IMF’s measure, and 12.0 percent according to the RBI’s measure. Both these indices could be potentially misleading,’’ said the Survey. Reflecting this, India’s global market share in manufacturing exports has risen between 2010 and 2015, the survey report said.For example RBI’s measure assigns an unusually high weight to the United Arab Emirates as it is a major source of India’s oil imports, and a transshipment point for India’s exports.But little of this trade has to do with competitiveness, the Economic Survey said.The rupee is seen overvalued going the central bank’s REER value. It was at about 105 in December last year meaning it was overvalued by 5%.

Source: Economic Times January 31, 2017 14:29 UTC